M/s Abaxial Architects P. Ltd., New Delhi V. ACIT, New Delhi

ITA 1233/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8595 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 07-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RINKU SINGH SENIOR
• Keywords: Opportunity of being heard; Source of fund; TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1233/DEL./2016 (ASSESSMENT YEAR : 2012-13) M/S. ABAXIAL ARCHITECTS P. LTD., VS. ACIT, CIRCLE 1 (1), PLOT NO.8, POCKET 1, JASOLA, NEW DELHI. NEW DELHI 110 025. (PAN : AACCB3846J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. YADAV, ADVOCATE REVENUE BY : MS. RINKU SINGH, SENIOR DR DATE OF HEARING : 13.03.2019 DATE OF ORDER : 09.04.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. ABAXIAL ARCHITECTS P. LTD. (HE REINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 06.01.2016 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NEW DELHI, QUA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT THE LD. CIT (APPEAL)' HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS.12,00,000/- REPRES ENTING THE BONUS PAID TO THE DIRECTOR EMPLOYEE. ITA NO.1233/DEL./2016 2 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND O N FACTS IN SUSTAINING THE ADDITION OF RS.25,00,000/- BY DIS ALLOWING THE LEGAL AND PROFESSIONAL EXPENSES. 3. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND O N FACTS IN SUSTAINING THE ADDITION DESPITE NO PROPER OPPORT UNITY OF BEING HEARD WAS PROVIDED BY THE AO. 4. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPL ES OF CONTEMPORARY JURISPRUDENCE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER MADE AD DITION OF RS.12,00,000/- BEING THE BONUS PAID TO MS. SUPARNA BHALLA, ONE OF THE DIRECTORS UNDER SECTION 37(1)(II) OF THE INCOME -TAX ACT, 1961 (FOR SHORT THE ACT) ON THE GROUND THAT MS. SUPARN A BHALLA IS ALSO HOLDING 50% SHARES IN THE ASSESSEE COMPANY AND IS E NTITLED FOR SALARY OF RS.6,00,000/- AND BY VIRTUE OF HER SHAREH OLDING WAS ENTITLED TO RECEIVE THE SAID AMOUNT OF SERVICES REN DERED IN THE FORM OF SHARES IN PROFIT AS DIVIDEND. AO ALSO MADE ADDI TION OF RS.25,00,000/- CLAIMED TO HAVE BEEN PAID TO M/S. RO CKHARD INFRASTRUCTURE PVT. LTD. ON ACCOUNT OF LEGAL AND PR OFESSIONAL CHARGES ON FAILURE OF THE ASSESSEE TO PROVE THE GEN UINENESS OF SUCH EXPENDITURE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITIONS BY DISM ISSING THE ITA NO.1233/DEL./2016 3 APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 5. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ADDITION U/S 115-O OF THE ACT INSERTED W.E.F. 01.06 .1997 CONTENDED INTER ALIA THAT EVERY COMPANY IS LIABLE TO PAY THE TAX @ 15% ON ACCOUNT OF DIVIDEND DISTRIBUTED BY IT TO ITS SHAREH OLDERS UNDER SUB- SECTION (2) OF SECTION 115-O; THAT THIS TAX IS APPL ICABLE EVEN IF THE DOMESTIC COMPANY HAS NO INCOME AND THAT SECTION 115 -O IS NON- OBSTANTE PROVISION WHICH OVERRIDES THE GENERAL PROV ISIONS OF SECTION 36(1)(II) OF THE ACT; AND RELIED UPON THE D ECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHRYS CAPIT AL VS. DCIT 376 ITR 183 (DELHI) AND THE COORDINATE BENCH O F THE TRIBUNAL IN NEW SILK ROUTE VS. DCIT 43 CCH 372 (M UM.) . 6. LD. AR FOR THE ASSESSEE FURTHER CONTENDED INTER ALIA THAT THE ASSESSEE HAD NOT PAID BONUS OUT OF DIVIDEND OR PROF IT; THAT MS. SUPARNA BHALLA, DIRECTOR HAS PAID THE TAX ON THE BO NUS @ 30% I.E. HIGHEST RATE OF TAX WHEREAS THE COMPANY HAS TO PAY THE TAX @ 15% ITA NO.1233/DEL./2016 4 AND AS SUCH, THERE IS NO LOSS TO THE REVENUE; THAT BONUS HAS BEEN GIVEN TO MS. SUPARNA BHALLA FOR HER HARD WORK FOR T HE ASSESSEE COMPANY. 7. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE RELIED UPON THE DECISION RENDERED BY THE AO AS WELL AS LD. CIT (A) AND CONTENDED INTER ALIA THAT THE BONUS PAID TO MS. SUP ARNA BHALLA IS DOUBLE THE SALARY AND IS NOT SUPPORTED WITH ANY AGR EEMENT OR BOARDS RESOLUTION; THAT THERE IS NO LINK BETWEEN B ONUS PAID AND SERVICES RENDERED; AND THAT THERE IS NO EVIDENCE IF ANY SPECIFIC SERVICES HAVE BEEN RENDERED BY MS. SUPARNA BHALLA A ND RELIED UPON THE DECISION OF SPECIAL BENCH OF THE ITAT IN M/S. DALAL & BROACHA STOCK BROKING (P) LTD. (2011) 131 ITD 36 AND COORDINATE BENCH OF THE TRIBUNAL IN TRAVELMATICS (P ) LTD. VS. DCIT IN ITA NO.549/CHD/2010 DATED 09.12.2014 . 8. UNDISPUTEDLY, MS. SUPARNA BHALLA HAS ALSO BEEN P AID SALARY OF RS.6,00,000/- DURING THE YEAR UNDER ASSESSMENT W HO IS HOLDING 50% SHARES IN THE ASSESSEE COMPANY AND IS ALSO ENTI TLED TO RECEIVE PROFIT OR DIVIDEND. IT IS ALSO NOT IN DISPUTE THAT AS PER PROVISIONS CONTAINED U/S 36(1)(II), THE COMMISSION AND BONUS P AID TO EMPLOYEES IS ALLOWABLE EXPENDITURE FOR THE SERVICES RENDERED BUT THIS PROVISION DOES NOT APPLY IN CASE OF PERSON WHO IS ENTITLED TO RECEIVED THE PROFIT OR DIVIDEND FROM THE EMPLOYER. ITA NO.1233/DEL./2016 5 9. IN THE BACKDROP OF THE UNDISPUTED FACTS, ARGUMEN TS ADDRESSED BY THE LD. ARS OF THE PARTIES TO THE APPEAL, ORDERS PASSED BY THE LOWER AUTHORITIES AND CASES RELIED UPON, THE QUESTI ON ARISES FOR DETERMINATION IN THIS CASE IS : AS TO WHETHER PROVISIONS CONTAINED U/S 115-O BEING NON-OBSTANTE PROVISIONS OVERRIDE THE GENERAL PROVIS IONS OF SECTION 36(1)(II) OF THE ACT? 10. FOR FACILITY OF REFERENCE, PROVISIONS CONTAINED U/S 115-O(1) AND (2) ARE EXTRACTED AS UNDER :- (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT AND SUBJECT TO THE PROVISIONS OF THIS S ECTION, IN ADDITION TO THE INCOME-TAX CHARGEABLE IN RESPECT OF THE TOTAL INCOME OF A DOMESTIC COMPANY FOR ANY ASSESSMENT YEA R, ANY AMOUNT DECLARED, DISTRIBUTED OR PAID BY SUCH COMPAN Y BY WAY OF DIVIDENDS (WHETHER INTERIM OR OTHERWISE) ON OR AFTE R THE 1ST DAY OF APRIL, 2003, WHETHER OUT OF CURRENT OR ACCUMULAT ED PROFITS SHALL BE CHARGED TO ADDITIONAL INCOME-TAX (HEREAFTE R REFERRED TO AS TAX ON DISTRIBUTED PROFITS) AT THE RATE OF FIFTE EN PER CENT: (2) NOTWITHSTANDING THAT NO INCOME-TAX IS PAYABLE BY A DOMESTIC COMPANY ON ITS TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, THE TAX ON DISTRIBUTED PROF ITS UNDER SUB- SECTION (1) SHALL BE PAYABLE BY SUCH COMPANY. 11. BARE PERUSAL OF PROVISIONS CONTAINED U/S 115-O APPLICABLE TO THE PRESENT CASE BEING OF AY 2012-13 GOES TO PROVE THAT THESE ARE NON-OBSTANTE PROVISIONS WHICH OVERRIDE THE GENERAL PROVISIONS OF SECTION 36(1)(II) OF THE ACT, UNDER WHICH THE ASSES SEE COMPANY IS LIABLE TO PAY THE TAX @ 15% ON THE AMOUNT OF DIVIDE ND DISTRIBUTED BY IT TO ITS SHAREHOLDERS. ITA NO.1233/DEL./2016 6 12. WHEN WE EXAMINE THE PROPOSITION AT HAND IT BECO MES CLEAR THAT IN CASE, THE BONUS OF RS.12,00,000/- WAS NOT P AID TO MS. SUPARNA BHALLA, THE COMPANY WOULD HAVE BEEN LIABLE TO PAY THE TAX @ 15%. HOWEVER, WHEN THE AMOUNT OF RS.12,00,000/- HAVE BEEN PAID TO DIRECTOR, SHE BEING IN THE HIGHEST SLAB OF A TAX PAYEE PAID A TAX @ 30%. SO, THIS FACT GOES TO PROVE THAT PAYMEN T OF BONUS BY THE COMPANY TO THE DIRECTOR WAS NOT A PLOY TO EVADE THE TAX AS MS. SUPARNA BHALLA BEING DIRECTOR AS WELL AS SHAREHOLDE R HAS ACTUALLY PAID THE TAX @ 30%. THIS FACT HAS BEEN CERTIFIED B Y THE AUDITOR AS PER AUDITED BALANCE SHEET AND FORM 3CD, AVAILABLE A T PAGES 4 TO 26 OF THE PAPER BOOK RELEVANT PAGE 22. THIS FACT WAS ALSO BROUGHT TO THE NOTICE OF LD. CIT (A) THAT MS. SUPARNA BHALLA I S A TAX PAYEE AT THE HIGHEST TAX SLAB RATE AND THERE IS NO LOSS OF T AX TO THE REVENUE ON THIS ACCOUNT AS IS EVIDENT FROM PARA 3 ITALIC PORTI ON AT PAGE 4 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). 13. COORDINATE BENCH OF THE TRIBUNAL ALSO DECIDED I DENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN CASE CITED AS NEW SILK ROUTE (SUPRA) BY RETURNING FOLLOWING FINDINGS :- PAYMENT OF BONUS TO SHAREHOLDER-EMPLOYEES HAD RESU LTED IN PAYMENT OF MORE TAXES IN COMPARISON TO TAX PAYABLE HAD THE SAME AMOUNT BEEN PAID AS DIVIDEND TO SHAREHOLDERS. SO, IT COULD NOT BE HELD THAT IT WAS A DEVICE TO EVADE TAXES. NO T ONLY THIS, IT WAS FOUND THAT THE SHAREHOLDERS WERE PROFESSIONALLY HIGHLY QUALIFIED. PAYMENT OF BONUS WAS A BUSINESS DECISION AND TILL IT WAS NOT PROVED THAT SAME WAS NOT PAID ACTUALLY, IT COULD NOT BE DISALLOWED. THE ASSESSEE HAD CLAIMED THAT IT WAS BA SED ON ITA NO.1233/DEL./2016 7 PERFORMANCE EVALUATION AND THE AD HAD NOT CONTRAVEN ED THE FACT. THE ASSESSEE HAD DEDUCTED TAX AT SOURCE ON TH E BONUS PAID TO THE SHAREHOLDER DIRECTORS AND THEY HAD SHOWN THE RECEIPT OF BONUS IN THEIR RESPECTIVE RETURNS. THEY WERE IN THE HIGHEST SLABS OF TAX PAYMENT. 14. HONBLE DELHI HIGH COURT IN CASE OF CHRYS CAPITAL (SUPRA) ALSO HELD THAT WHEN SHAREHOLDERS ALSO HELD DIRECTOR IAL POSITION IN THE ASSESSEES COMPANY, THE DEDUCTION CLAIMED BY TH E ASSESSEE U/S 36 (1)(II) OF THE ACT IN RESPECT OF BONUS PAID TO I TS SHAREHOLDER EMPLOYEES WAS ALLOWABLE. OPERATIVE PART OF THE DEC ISION OF THE HONBLE DELHI HIGH COURT IN CHRYS CAPITAL (SUPRA) IS REPRODUCED AS UNDER :- (II) THAT THE BONUSES PAID TO THE TWO SHAREHOLDER -DIRECTORS IN THE PRECEDING TWO FINANCIAL YEARS WERE IN THE RATIO OF 60-65 PER CENT. : 40-35 PER CENT. EVEN THOUGH THEIR SHAREHOLD ING WAS 1 : 1. THE BALANCE-SHEET OF THE ASSESSEE PLACED ON RECORD ALSO INDICATED THAT THE TWO SHAREHOLDERS ALSO HELD DIRECTORIAL POS ITIONS IN THE ASSESSEE. THE DEDUCTIONS CLAIMED BY THE ASSESSEE UN DER SECTION 36(1)(II) OF THE ACT IN RESPECT OF THE BONUSES PAID TO ITS SHAREHOLDER-EMPLOYEES WAS ALLOWABLE. 15. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, W E ARE OF THE CONSIDERED VIEW THAT THE CASE LAWS RELIED UPON BY T HE LD. DR FOR THE REVENUE ARE NOT APPLICABLE TO THE FACTS AND CIR CUMSTANCES OF THE CASE. CONSEQUENTLY, WE ARE OF THE CONSIDERED V IEW THAT AO AS WELL AS LD. CIT (A) HAVE ERRED IN MAKING ADDITION O F RS.12,00,000/- ON ACCOUNT OF BONUS PAID TO THE DIRECTOR EMPLOYEE W HICH IS ITA NO.1233/DEL./2016 8 ORDERED TO BE DELETED, HENCE GROUND NO.1 IS DETERMI NED IN FAVOUR OF THE ASSESSEE. GROUNDS NO.2, 3 & 4 16. AO AS WELL AS LD. CIT (A) HAVE MADE/CONFIRMED A DDITION OF RS.25,00,000/- BY WAY OF DISALLOWANCE OF LEGAL AND CONSULTANCY CHARGES BY THE ASSESSEE ON THE GROUND THAT THE ASSE SSEE HAS CLAIMED BOGUS EXPENSES. 17. IT IS THE CASE OF THE ASSESSEE THAT LEGAL AND C ONSULTANCY SERVICES CHARGES OF RS.25,00,000/- PAID TO M/S. ROC KHARD INFRASTRUCTURE PVT. LTD. FROM WHOM IT HAS TAKEN SER VICES IN THE FORM OF PROJECT REPORTS, SPECIALIZED RESEARCH DATA PROVI SIONS, ETC. ON QUERY RAISED BY THE AO, ASSESSEE PROVIDED ADDRESS O F M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. WITH ITS DIRECTOR S NAMELY SHRI SHYAM LAL AND SHRI RAJEEV KUMAR. AO DEPUTED TWO IN SPECTORS FOR MAKING ENQUIRIES WHO HAS GIVEN REPORT DATED 16. 02.2015 AND SUMMON WAS SERVED UPON SHRI RAVINDER KUMAR SHUKLA, DIRECTOR OF THE ASSESSEE COMPANY AND HIS STATEMENT WAS RECOR DED ON 27.02.2015, THE RELEVANT EXTRACT AS REFERRED BY AO IN PARA 5.9 IS EXTRACTED FOR READY PERUSAL AS UNDER :- 5.9 THE DIRECTOR OF THE ASSESSEE COMPANY SH RAVIND ER KUMAR SHUKLA, WAS APPRISED OF THE INQUIRY MADE BY T HIS OFFICE ON THE CREDENTIALS OF M/S. ROCKHARD INFRASTRUCTURE PVT LTD AS PER THE FINDINGS IN THE INSPECTORS REPORT DATED 16.02.2 015 BY A SPECIFIC QUERY IN THE STATEMENT ON OATH WHICH IS QU OTED BELOW FOR READY REFERENCE: ITA NO.1233/DEL./2016 9 'Q.19 AN ENQUIRY BY THE INSPECTORS OF INCOME TAX WA S DONE AT THE GIVEN ADDRESSES OF THE COMPANY M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. AND THOSE OF THE DIRECTORS SHRI SHYAM LAL AND SHRI RAJEEV KUMAR AS PER THE LETTER DATED 13.02.2015 FILED DURING SCRUTINY PROCEEDINGS BY THE AUTHORIZED REPRESENTATIVE. I AM SHOWING YOU THEIR REPORT DATED 16.02.2015, PLEASE ACKNOWLEDGE AND COMMENT ON THE SAME. ANS. I HAVE READ THE REPORT AND UNDERSTOOD ITS CONT ENTS. I WILL NOT BE ABLE TO SAY MUCH. Q.20 WOULD YOU LIKE TO CROSS EXAMINE THE INSPECTORS FOR THE REPORT BEING SHOWN TO YOU? ANS. NO, I WILL NOT LIKE TO CROSS EXAMINE THEM'. HE WAS FURTHER ASKED, RELEVANT EXTRACTS OF THE STAT EMENT ARE REPRODUCED FOR READY REFERENCE: 'Q.21 YOU ARE BEING OFFERED A LAST OPPORTUNITY TO PRODUCE SHRI RAJEEV KUMAR OR ANY SUCH PERSON OF M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. TO VERIFY THE GENUINENESS OF THE EXPENSE INCURRED DURING THE RELEVANT PREVIOUS YEAR RELATED TO THE SAID COMPANY OR TO PROVE THE BONA FIDE OF THE AGREEMENT ENTERED WITH M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. ANS. NO, I WILL NOT BE ABLE TO PRODUCE THE DIRECTO RS OR AUTHORIZED SIGNATORY OF M/S ROCKHARD INFRASTRUCTURE PVT. LTD. TO PROVE GENUINENESS OF THE EXPENDITURE INCURRED. Q.22 IT IS AGAIN BEING CLARIFIED THAT M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. IS SHOWN TO BE REGISTERED AT KOLKATA. DO YOU THINK SENDING AN INQUIRY LETTER OR INSPECTOR AT THEIR KOLKATA ADDRESS WILL BE OF AN Y ASSISTANCE TO VERIFY THE GENUINENESS OF THE EXPENDITURE CLAIMED. ANS. NO, AS I AM NOT SURE. I HAVE NEVER BEEN TO THE OFFICE OF M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. AT DELHI OR AT KOLKATA. Q.23 FROM YOUR ABOVE STATEMENT, IT SEEMS AMPLY CLEA R THAT THE EXPENDITURE CLAIMED IS NOT SUBSTANTIATED AND IT DOES NOT APPEAR TO BE GENUINE. YOU WERE ITA NO.1233/DEL./2016 10 DIRECTOR IN THE COMPANY IN THE RELEVANT PREVIOUS YEAR 2011-12 RELEVANT TO AY 2012-13 AND SIGNED THE AGREEMENT ON BEHALF OF THE COMPANY AS DIRECTOR. NO DUE DILIGENCE ABOUT EXPERTISE OF M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. IS ADMITTED BY YOU WAS DONE. THE EXPENDITURE CLAIMED IS NOT SUPPORTED BY FIELD ENQUIRIES THAT HAVE BEEN DULY APPRISE TO YOU. DO YOU THINK MS SUPARNA BHALLA OTHER DIRECTOR WILL BE IN A POSITION TO EXPLAIN OR PROVE THE GENUINENESS OF THIS EXPENSE? ANS. NO, IT IS NOT REQUIRED. I AM COMPETENT TO STAT E WHAT HAS BEEN STATED IN MY STATEMENT TO YOUR SPECIFIC QUERIES. Q.24 WHAT ARE YOUR SOURCES OF INCOME AND INCOME-TAX PARTICULARS? ANS. I AM HAVING INCOME OF APPROXIMATELY 10 TO 12 LAKHS PER ANNUM AS FREELANCER IN CONSTRUCTION WORK. I AM INCOME-TAX ASSESSEE AND MY PAN IS AVPPS1222A' 18. AO BY RELYING UPON THE STATEMENT OF SHRI RAVIND ER KUMAR SHUKLA FOUND THE EXPENDITURE CLAIMED BY THE ASSESSE E AS BOGUS AND THEREBY DISALLOWED THE SAME. 19. LD. CIT (A) ALSO CONFIRMED THE FINDINGS OF THE AO WHICH ARE BASED UPON THE STATEMENT OF SHRI RAVINDER KUMAR SHU KLA, DIRECTOR OF THE ASSESSEE COMPANY WHO HAS STATED THAT HE HAS NEVER VISITED THE OFFICE OF M/S. ROCKHARD INFRASTRUCTURE PVT. LTD ., CALCUTTA AND AS SUCH, HOW HE WAS ABLE TO KNOW THE EXPERTISE OF M /S. ROCKHARD INFRASTRUCTURE PVT. LTD. FOR PROVIDING LIAISON AND CONSULTANCY SERVICES TO THE ASSESSEE. ITA NO.1233/DEL./2016 11 20. THE LD. AR FOR THE ASSESSEE CHALLENGED THIS ADD ITION PRIMARILY ON THE GROUND THAT SHRI RAVINDER KUMAR SH UKLA (EX- DIRECTOR) OF THE ASSESSEE COMPANY WAS NEVER CONFRON TED TO THE ASSESSEE FOR ITS REBUTTAL AND THE ENTIRE MATERIAL H AS BEEN COLLECTED AT THE BACK OF THE ASSESSEE AND RELIED UPON THE GUIDEL INES OF THE CBDT PRESCRIBING PROCEDURE FOR ASSESSMENT CONTAINED IN CHAPTER 2 ASSESSMENT PROCEDURE (SCRUTINY). THE OPERATIVE PARA 3.2.6 AND 3.2.7 IS AS UNDER :- 3.2.6 RECORDING OF STATEMENTS WHILE RECORDING STATEMENTS THE FOLLOWING POINTS MAY BE KEPT IN MIND :- I. A STATEMENT IS REQUIRED TO BE RECORDED BEFORE T HE AO II. THE AO CAN DECIDE WHETHER TO ALLOW OR NOT TO ALLOW THE PRESENCE OF THE ASSESSEE OR HIS AR. IN CASE THEY ARE PRESENT THAT FACT SHOULD BE RECORDED AT THE END OF THE STATEMENT AND THEIR SIGNATURES OBTAINED. III. THE SIGNATURE OF THE DEPONENT SHOULD BE OBTAI NED ON EACH PAGE AND AT THE END OF THE STATEMENT. EACH CORRECTION SHOULD BE ATTESTED BY THE DEPONENT. A DEPONENT WHO REFUSES TO SIGN IS LIABLE FOR PENALTY U/S 272A. IV. IN CASE OF A STATEMENT ON OATH THE OATH SHOULD BE ADMINISTERED BY THE AO. THE FORM OF OATH/AFFIRMATION IS STIPULATED IN THE SCHEDULE TO SECTION 6 OF THE INDIAN OATHS ACT. THE FORM OF OATH GIVEN IS: '1 DO SWEAR IN THE NAME OF GOD/OR 1 DO SOLEMNLY AFFIRM THAT WHAT I SHALL STATE WILL BE THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH'. V. A WITNESS SHOULD FIRST BE EXAMINED BY THE PARTY PRODUCING HIM (ASSESSEE OR THE AO), FOLLOWED BY ITA NO.1233/DEL./2016 12 CROSS-EXAMINATION BY THE OTHER PARTY. AFTER THE CROSS-EXAMINATION THERE CAN BE A RE-EXAMINATION BY THE ORIGINAL PARTY. VI. THE STATEMENT RECORDED FROM A DEPARTMENTAL WITNESS CANNOT BE USED AGAINST THE ASSESSEE UNLESS THE ASSESSEE IS GIVEN AN OPPORTUNITY TO CROSS- EXAMINE THE WITNESS. A STATEMENT WITHOUT SUCH CROSS EXAMINATION WOULD NOT BE ADMISSIBLE EVIDENCE. A COPY OF THE STATEMENT SO RECORDED SHOULD BE GIVEN TO THE ASSESSEE. IN CASE THE ASSESSEE DOES NOT WISH TO CROSS-EXAMINE THE WITNESS, THAT FACT SHOULD BE RECORDED IN THE ORDER SHEET AS WELL AS IN THE BODY OF THE STATEMENT. THE SIGNATURE OF THE ASSESSEE SHOULD BE OBTAINED ON SUCH NOTING. OFFENCES RELATING TO DEPOSITIONS ATTRACT VARIOUS PE NAL CONSEQUENCES UNDER THE INDIAN PENAL CODE AS WELL. 3.2.7 GRANTING COPIES AN ASSESSEE SHOULD BE PROVIDED WITH COPIES OF STATE MENTS BEFORE THE LATTER ARE UTILISED AGAINST HIM FOR THE PURPOSE OF ASSESSMENT. GRANTING OF COPIES SHOULD BE RECORDED I N THE ORDER- SHEET AND BROUGHT OUT IN THE ASSESSMENT ORDER AS WE LL. A WITNESS IS NOT ENTITLED TO A COPY OF HIS STATEMENT. 21. WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ENT IRE CASE OF THE REVENUE IN TREATING LEGAL AND CONSULTANCY SERVI CE CHARGES AS BOGUS HINGES UPON STATEMENT OF SHRI RAVINDER KU MAR SHUKLA, EX-DIRECTOR OF THE ASSESSEE COMPANY, HIS STATEMENT CANNOT BE READ INTO EVIDENCE AGAINST THE ASSESSEE UNLESS RIGHT TO CROSS-EXAMINATION OF SHRI RAVINDER KUMAR SHUKLA IS NOT PROVIDED TO TH E ASSESSEE. MOREOVER, ASSESSEE CLAIMED TO HAVE PAID SERVICE TAX ON THE AMOUNT PAID TO M/S. ROCKHARD INFRASTRUCTURE PVT. LTD. AND HAS ALSO FILED NO TDS CERTIFICATE ISSUED BY THE INCOME-TAX DEPARTMENT TO M/S. ROCKHARD INFRASTRUCTURE PVT. LTD., WHICH FACT PRIMA FACIE GOES TO ITA NO.1233/DEL./2016 13 PROVE THAT THE PAYMENT WAS MADE. SO, IN THESE CIRC UMSTANCES, WE DEEM IT NECESSARY TO SET ASIDE THIS ISSUE TO THE AO WHO SHALL PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY PROVIDING THE RIGHT TO CROSS EXAMINE SHRI RAVINDER KUMAR SHUKLA AND TO HAVE COPIES OF THE DOCUMENTS/ STATEMENTS REL IED UPON BY THE AO. CONSEQUENTLY, GROUNDS NO.2 & 3 ARE DETERMINED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES. 22. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF APRIL, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF APRIL, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.